Lithuanian economy review - 2017

The GDP growth in Lithuania accelerated. In 2017, as compared to the previous year, Lithuania`s GDP increased by 3.8% (seasonally adjusted) and reached €41.9 billion at current prices. The economic growth was driven by the household consumption and the gross fixed capital formation. The growth in household consumption related to the positive changes in wages, increasing number of employees and credit growth. The main positive impact for the growth in investments was higher spending in the government sector, largely related to the increase of absorption of the funds from the new EU multiannual financial framework 2014-2020. The highest growth of gross value added was in wholesale and retail trade, repair of motor vehicles and motorcycles, transportation and storage, accommodation and food service activities, manufacturing and construction. The decline was in agriculture and real estate operations.

The investments in tangible fixed assets picked up in the government and the private sectors. In the period under review, the investments in tangible assets amounted to €6.02 billion or by 6.0% higher as compared to the previous year. The main growth of the investments was into acquisition of machinery, equipment, vehicles and construction of buildings and civil engineering structures. Meanwhile the investments flow into maintenance of machinery, equipment and vehicles was negative. The increase of the investments of government sector reached 13.5% or €0.21 billion due to the higher EU structural funds flow.

The unemployment rate continued to decline, wages keeps growing, but imbalances in the labour market persist. In 2017, the unemployment rate fell by 0.8 percentage points and reached 7.1%. At the same time, youth unemployment rate and long-term unemployment rate has dropped to the lowest levels since 2008 (13.3% and 2.7% respectively). The employment growth mostly occurred in the private sector, in particular in transport and storage sector, administrative and support service activities, manufacturing and construction sectors. Real average gross monthly wages increased by 5.7% and reached € 840.1. Despite recent positive changes, imbalances remains. High demand in high-skilled professionals, large regional variations in unemployment rates.

Exports of goods declined. In 2017, as compared to the previous year, the value of exports of goods increased by 16.9% to € 26.4 billion. The exports of Lithuanian origin goods (energy products excluded) increased by 12.8% (mostly engineering products, food and tobacco, furniture and other wooden products). The growth in exports of refined petroleum products (by 27.8%) was due to increase in prices and production. At the same time, re-exports of goods picked up by 18.9%. According to estimations of “Enterprise Lithuania”, the increase in exports of Lithuanian origin goods should reach 6.0% in 2018.

Industry continues to grow profitable. In the period under review, as compared to the previous year, industrial production increased by 6.7% and amounted to €20.5 billion. Without refined oil products, industrial production increased by 7.3% or € 1.2 billion to € 16.4 billion. The profit in manufacturing industry increased by 8.1% to € 1.26 billion.

The construction sector growth recovered after fall in 2016. In 2017, as compared the previous year, the volume of construction works carried out within the country grew by 9.5% and amounted to € 2.84 billion. After suffering a slump in the investments of public sector in 2016 (mostly caused by the EU structural fund planning period changeover), the growth on investments occurred in the private and public sectors.

The transport sector continued to grow. In 2017, the growth rate of total carried cargoes in transport sector was 14.4%. The growth in the road transport accounted for 21.1%, handled cargo by rail transport picked up by 10.5%, in seaports it grew by 3.6%, meanwhile amount of cargoes in airports fell by 20.0%.